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Peak iPhone? What Apple’s record results mean both for itself, and for multichannel retailers

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A billion Apple devices, from iPods and iPads to the Apple Watch and Apple TV, are now in active use, the manufacturer and retailer said as it reported record profits of $18.4bn (£12.8bn) in the first quarter of its financial year. While sales of the iPhone were flat in the three months to December 26, and sales of iPads were down by 21% on the same time last year, revenue from downloads and other services grew by 26%.

“Our team delivered Apple’s biggest quarter ever, thanks to the world’s most innovative products and all-time record sales of iPhone, Apple Watch and Apple TV,” said Tim Cook, Apple’s CEO. “The growth of our Services business accelerated during the quarter to produce record results, and our installed base recently crossed a major milestone of one billion active devices.”

The figures from Apple show how its revenue growth is shifting towards the software that it enables shoppers to buy using its devices. Overall Apple sales reached $75.9bn (£52.9bn) in the first quarter of its financial year, 2% up on the same time last year. Sales in Europe reached $16.9bn (£11.8bn), 4% up on last year, while sales in the Americas were down by 4%, at $29.3bn (£20.4bn), and Chinese sales were up by 14%.

iPhone sales of $51.6bn (£35.9bn)were 1% up on last time, though volumes – 74,779 sold in the quarter – were flat. iPad sales, worth $7.1bn (£4.9bn), were 21% down on last time, but revenues from services, worth $6.1bn (£4.2bn), were 26% up on last time.

Retailers studying the way their own customers buy may consider that peak iPhone has arrived, with mobile shopping likely continue its fast growth as more people own a smartphone. They’ll also be considering what that means for the way they sell. IMRG has said that all ecommerce growth in 2015 came from mobile transactions, with 45% of all online sales made over a mobile phone in the third quarter, running up to October 2015. In January, Capgemini’s head of digital Alex Smith-Bingham said that mobile had become the primary online shopping channel over 2015. “In 2016 I’m confident we’ll see this influence increase even further with mobile representing over half of all sales made online,” he said. Earlier figures suggested that Apple smartphone owners were more likely to buy online.

Figures out today from SimilarWeb suggested that mobile accounted for 64% of visits to UK retail sites in 2015, compared to 35.5% for desktop, and its analysis found that all of the 10 leading UK retail sites, including, Amazon , eBay and Argos , registered a bigger share of visits from mobile than from desktop.

Pavel Tuchinsky, SimilarWeb digital insights manager, said: “Shopping via mobile is now the default, with all leading retailers experiencing a majority of visits to their sites via smartphones. The UK is now a European leader in mobile shopping, far ahead of France, and Germany.

“However engagement and time on site has not been maintained in the transition towards mobile shopping. Retailers must continue to embrace the rapid change towards mobile, including better checkout flows, and integrations between desktop and mobile sites.”

Ian Fogg, head of mobile analysis at IHS Technology, said of Apple’s figures: “Apple has repeatedly demonstrated an ability to buck wider economic conditions and persuade consumers to spend more on their smartphone.” But, he added, there were “headwinds in the maturing smartphone market that are finally impacting apple. Overall, the smartphone market is slowing. Apple has resisted these wider market trends, but their competition is as much their own products from years ago as it is Samsung, Huawei or Xiaomi. Apple’s hardest competitor is itself because it must persuade existing iPhone owners to upgrade and buy the current model.”

He added: “Apple knows it needs to diversify from its dependence on the iPhone. Early signs are the new product lines – Apple Pay, the new app-enabled Apple TV and Apple Watch – are growing well, but not yet fast enough to off-set the headwinds affecting the iPad and iPhone. Apple must leverage its vast iPhone installed base to cross-sell these devices to iPhone owners now, while the iPhone is selling well, to set up its business for the long term.”

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